Joint Venture Agreement

Joint Venture Agreement: Work Together on Clear Terms

A joint venture agreement sets out how two or more businesses or individuals will work together on a shared project, while staying independent. It records what each member contributes, how profits and losses are shared, who runs the joint venture day to day, how decisions are made and what happens when it ends. Robot Lawyer drafts a contractual joint venture agreement for two to four members from your answers, for the law of the country or state you choose. On the Verified plan, a legal professional checks it before you sign.

CONTENTS

What Is a Joint Venture Agreement?

A joint venture brings together the money, skills, contacts or assets of two or more parties for a particular purpose, such as developing a product, entering a new market or delivering a project. Each member stays a separate business, but they agree how they will share the work, the costs and the rewards.

Joint ventures can be set up in two main ways. A contractual joint venture is based on an agreement between the members, with no new company. A corporate joint venture sets up a new company owned by the members, usually with a shareholders' agreement. This document is a contractual joint venture agreement. If you plan to set up a new company, a shareholder agreement may suit you better.

When Do You Need One?

• Shared projects
  Two businesses delivering a project or bidding for a contract together.
• Product development
  Partners combining technology, skills or funding to develop a product.
• New markets
  A business working with a local partner to enter a new country or sector.
• Property and development
  Investors and developers working together on a property project.
• Events and campaigns
  Organisations co-running an event, a campaign or a one-off venture.

What's Included in Your Agreement?

• The venture
  Its name, purpose, start date and when it ends.
• The members
  Two to four members and their details.
• Contributions
  What each member contributes and what each contribution is worth.
• Profits and losses
  How they are shared between the members.
• Responsibilities
  What each member is responsible for.
• Management and voting
  Who manages the venture, how votes are divided and how deadlock is resolved.
• Transfers
  Whether a member can sell or transfer their interest to an outsider.
• Confidentiality and non-compete
  Optional protections for the venture's information and business.
• Milestones
  Any targets the members have agreed.
• Ending the venture
  The vote needed to end it early and how assets are divided.
• Disputes
  Negotiation and mediation before court, if you choose.

Avoiding an Accidental Partnership

In many countries, two or more parties who carry on a business together with a view to profit can be treated as a partnership, whatever their agreement says. That can make each member liable for the others' debts. Your agreement states that the members don't intend to form a partnership and can't bind each other, and includes practical protections, such as each member being responsible for its own debts and taxes. If limited liability is important, consider setting up a company or an LLP for the venture.

How It Works on Robot Lawyer

1. Answer the questions
   Tell us about the venture, the members, contributions, profit sharing, management, voting and how it ends.
2. Generate your agreement
   We draft a complete joint venture agreement under the law you choose.
3. Get it verified
   On the Verified plan, a qualified legal professional checks your agreement within 24 hours and makes amendments where needed. See how our documents are verified.
4. Sign it
   All members sign the agreement before the venture starts.

How It Works in Different Countries

• UK
  A contractual joint venture can be treated as a partnership under the Partnership Act 1890 (in Scotland, a partnership is a separate legal person). Competition law may apply where competitors work together.
• United States
  Members of a joint venture may be treated as partners under state partnership law, and many US joint ventures are set up as LLCs instead. Antitrust law may apply to ventures between competitors.
• Ireland, Canada and Australia
  Partnership law in each country can treat a contractual joint venture as a partnership, and competition rules apply to arrangements between competitors.

These notes are general. Take tax and competition advice for larger ventures.

Joint Venture Agreement FAQs

What's the difference between a joint venture and a partnership?

A joint venture is usually for a particular project or purpose, while a partnership is an ongoing business. A contractual joint venture can still be treated as a partnership by law, so the agreement includes wording and protections to reduce that risk.

How many members can a joint venture have?

This agreement works for two, three or four members. For more members, or a more complex structure, consider setting up a company.

How are profits shared?

However the members agree. Profits are often shared in proportion to contributions, but the members can choose a different split.

Can a member leave the joint venture?

The agreement sets out whether a member can transfer their interest to an outsider and the vote needed to end the venture early. If you want extra exit routes, such as a buyout when a member breaches the agreement, add them in your answers.

Do we need a non-compete clause?

It is optional. It can stop members competing with the venture for a period after they leave, but it must be reasonable to be enforceable, and competition law may limit it.

Can I use this agreement outside the UK?

Yes. Your agreement is drafted under the law of the country or state you choose. Our lawyers are qualified in England and Wales and check documents for good practice, clear formatting and the law of England and Wales. They are not qualified in other countries' law, so if your agreement is governed by another country's law, we recommend having a local lawyer check it too.

Create a Joint Venture Agreement

Agree the terms of your venture before the work starts. You can start with a 7-day free trial. See our pricing for the plans. Related documents: Partnership Agreement, Shareholder Agreement, LLP Agreement and Non-Disclosure Agreement.